Before Season 4
After Derek stole a weapon called Ice 5, he contacted the CIA and told them he wanted $10,000 in return for the weapon. He contacted Weiss and Sydney in an Algerian bazaar and had a sit-down with Sydney. While talking to Sydney, she requested to have the weapon but Modell said the only way to smuggle it out was to swallow it.
Shortly after, several thugs spotted Modell and Sydney and were forced to retreat. During the retreat, Modell was tackled by one of the thugs and the weapon inside his stomach activated. They began to run again, but Modell's leg suddenly snapped off. Unable to walk, Vaughn and Sydney carried a wounded Modell to the escape van. Just as Weiss was about to bring Modell to safety, a thug shot him in the head and he shattered into pieces.
It was later confirmed by Marshall that the weapon he swallowed began to freeze-dry his body until he was crystallized. Whether or not Modell was shot, he would have died regardless for swallowing it in the first place.